“Our lives are defined by opportunities, even the ones we miss.” – Eric Roth
For anyone who wants a comfortable retirement, 1 July 2017 is a very important date, as this is when the majority of the government’s proposed super changes are likely to come into effect.
Although it seems like super is constantly under attack, it is still the most effective way to provide for retirement. It remains a tax-free retirement option, and the only legal way to ensure you pay no tax on ‘decent’ retirement incomes.
In fact, super is so good that the government is looking to reduce how much we can use it. One way they are doing this is by reducing the contributions you can make. Among the various proposals is a significant restriction on Non Concessional Contributions (NCCs).
What are NCCs?
An NCC is an amount that is transferred into super from after-tax monies. Over the years, it has been a very effective way to move money from you own name (where it could attract tax in retirement) into super (where it can be tax-free).
Commonly, this might occur when you receive an inheritance, take a redundancy, sell a business or realise a sum from a property sale. NCCs can also be used when you transfer an existing investment (such as a share portfolio or a commercial property), into a self-managed super fund for tax purposes.
What is changing? Currently, anyone eligible can put $180,000 worth of NCCs into super each year. And if you’re under 65, you can make three years’ worth of NCCs in one hit – allowing $540,000 to be put into super. However, from 1 July 2017, these rules will be amended so that:
- The annual limit is reduced to $100,000
- The three year ‘bring forward’ limit is reduced to $300,000
- Once you have $1.6m in super, you can no longer make NCCs at all.
These are significant changes that will greatly reduce your ability to move large sums into super.
Make the most of this window of opportunity now!
Thankfully, a window of opportunity still exists for you to move large sums into your super. While the current rules are still in place, it is possible for a couple to put over $1 million into super. Once the rules change, this opportunity will be lost forever. So now is the time to act.
If you fit into one or more of the following categories, you may be impacted by this rule change:
- You are 50 plus, with super of $750,000 or more
- You are aged 62 or older
- You will have more than $1.3 million in super as at 30 June 2017
- You have significant assets (like cash, shares, managed funds, properties) outside of super – which you may be better off having inside your super.
What’s the next step?
With only months until this change becomes law, urgent action may be needed before this opportunity is lost forever.
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EP Financial Services Pty Ltd
ABN 52 130 772 495 AFSL 325 252 (“ELSTON”)
GPO Box 2220
Brisbane Q 4001